FUNDAMENTALS

No major Brexit news or clues regarding the June Fed rate Hike yesterday (June 1st) left the pair fundamentally in balance. 

UK Construction PMI is out at 09.30 (GMT+1) which is expected to be positive although slightly short of last month’s reading.

US Employment Data including ADP and Unemployment Figures are out at 13.15 and 13.30 (GMT+1) respectively.  Only minor changes from last month’s figures are forecast.

The ECB’s rate decision (12.45 with the incite being provided at 13.30) has the potential for knock on effects to GBPUSD and should be monitored.

BOE Governor Carney and FOMC Members also speak today.  Carney is unlikely to rock the boat as his most recent explanations of the negative effects of Brexit on GBP have not moved the currency in the same way polling data does.

The FOMC members’ speeches will be interesting.  One is Kaplan (18.00) who previously said that a strong risk of
Brexit could cause the Fed to postpone a June hike.  Ironically this could move GBPUSD up in the short term if repeated, as recent chances of Brexit have increased according to polls which would imply the Fed avoiding June.

Trading will be slower than usual as some market participants sit on the sidelines in advance of tomorrow’s Nonfarm Payrolls.

General bias is still towards Dollar but sterling can move at a moment’s notice on the release of Brexit polling:  Remain = Rally, Brexit = Down.

I expect USD to soften if FOMC members clarify that June is less likely, but focus will then shift on to July (A rise by then currently anticipated at 50%+ on Fedwatch) and I don’t see this massively harming dollar strength.

TECHNICALS


Price respected long term support yesterday around 1.44, making a brief incursion below to satisfy its weekly pivot action from M3 to M1. 

Price action in the Asian session was sideways and price is currently testing resistance at 1.445.   In the absence of major news this consolidation may continue ahead of tomorrow’s Nonfarm Payrolls.

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